Chapitre 2 Market Study ppt-2010.ppt - ecofine.com · Radisson Hotel 62'050 91'250 Holiday Inn...

11

Market Study

• Three components to perform a market study and valuation:

– Market Study

– Forecast of Revenues & Expenses

– Valuation

Bernard Jaquier - Novembre 2010

22

Define the primary market area

• A market area is a perimeter surrounding the subject property.

• determine the primary segments of demand presently using local hotels.

• The three markets segments generally found in most market areas are. – commercial travellers– meeting/convention visitors (group business)– and pleasure/leisure travellers

• Other segments often present include:

• government, airline crews, extended stay/relocation guests, sports teams, military, truck drivers, hospital/out patient, cruise ship, etc.


33

Historical Supply & Demand in

the market area

600'000

700'000

800'000

900'000

1'000'000

1'100'000

1'200'000

1'300'000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Years

Room Night Demand Room Night Supply


44

Historical Supply & Demand in the market area

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Years

Perc

enta

ge

∆%RND ∆%RNS


55

Competition in the market area

• Primary Competitors

• Secondary Competitors


66

Primary Competitors

Primary competitors are those hotels that

are similar to the subject property with

respect to the class and type of facilities

offered


77

Primary Competitors 2009

The 124-room Courtyard by Marriott opened on July l, 2009.

Its historic average room count (HARC) is 62 rooms

Primary Competitors Market Segmentation

Hotels # Rooms HARCAverage

RateOccupancy

Commercial

Meeting & Convention Leisure

Embassy Suites 200 200 151.00 78% 80% 5% 15%

Hilton Inn 275 275 136.00 72% 40% 50% 10%

Radisson Hotel 250 250 131.00 68% 45% 40% 15%

Holiday Inn 175 175 127.00 73% 55% 25% 20%

Courtyard 124 62 133.00 65% 75% 5% 20%

Ramada Inn 150 150 124.00 66% 65% 20% 15%

Island Inn 135 135 110.00 62% 60% 30% 10%

Quality Inn 175 175 125.00 78% 50% 10% 40%

Days Hotel 120 120 121.00 74% 70% 5% 25%

1604 1542


88

Primary Competitors 2009

Total Market Segmentation : Rooms sold Annual

Rooms sold Comm Convention Leisure Revenue

56'940 45'552 2'847 8'541 8'597'940

72'270 28'908 36'135 7'227 9'828'720

62'050 27'923 24'820 9'308 8'128'550

46'629 25'646 11'657 9'326 5'921'851

14'710 11'032 735 2'942 1'956'364

36'135 23'488 7'227 5'420 4'480'740

30'551 18'330 9'165 3'055 3'360'555

49'823 24'911 4'982 19'929 6'227'813

32'412 22'688 1'621 8'103 3'921'852

401'518 228'478 99'190 73'850 52'424'384

56.90% 24.70% 18.39% 130.57


99

Secondary Competitors

Secondary competition consists of those

lodging facilities that would not normally

attract the same type of visitor, but because

of special circumstances (such as location)

they become competitive.


1010

Secondary Competitors 2009

Based on competitive criteria, competitive weighting factors (CWF)

were assigned to each secondary hotel.

Market Segmentation

Hotels Rooms HARC CWF HARC AR OCC% Comm Convent. Leisure

Red Roof Inn 110 110 50% 55 45.25 82% 60% 5% 35%

Super 8 125 125 50% 63 42.50 78% 60% 5% 35%

Microtel 100 100 25% 25 35.75 90% 75% 0% 25%

Residence Inn 75 75 33% 25 98.00 77% 55% 10% 35%

Delta Inn 83 83 40% 33 41.50 63% 65% 10% 25%

Four Seasons 250 250 75% 188 150.00 72% 60% 30% 10%

743 743 388


1111

Secondary CompetitorsCWF

Based on competitive criteria, competitive

weighting factors (CWF) were assigned to

each secondary hotel.


1212

Secondary Competitors 2009

Hotels Rooms sold Comm Convention Leisure Revenue

Red Roof Inn 16'462 9'877 823 5'762 744'883

Super 8 17'794 10'676 890 6'228 756'234

Microtel 8'213 6'159 - 2'053 293'597

Residence Inn 6'956 3'826 696 2'435 681'687

Delta Inn 7'634 4'962 763 1'909 316'825

Four Seasons 49'275 29'565 14'783 4'928 7'391'250

Total 106'333 65'066 17'954 23'313 10'184'476

61.19% 16.88% 21.92% AR 95.78


1313

Primary competitors : supply & Demand - Year 2009

Hotels Rooms sold Supply

Embassy Suites 56'940 73'000

Hilton Inn 72'270 100'375

Radisson Hotel 62'050 91'250

Holiday Inn 46'629 63'875

Courtyard 14'710 22'630

Ramada Inn 36'135 54'750

Island Inn 30'551 49'275

Quality Inn 49'823 63'875

Days Hotel 32'412 43'800

401'518 562'830


1414

Secondary competitors : supply & Demand - Year 2009

Hotels Rooms sold Supply

Red Roof Inn 16'462 20'075

Super 8 17'794 22'813

Microtel 8'213 9'125

Residence Inn 6'956 9'034

Delta Inn 7'634 12'118

Four Seasons 49'275 68'438

106'333 141'602


1515

Total supply & Demand - Year 2009

Rooms sold Supply

Primary 401'518 562'830

Secondary 106'333 141'602

Total Market 507'851 704'432


1616

Fair Share

The fair share for a given property is that

property's room count as a percent of the

total room count in the competitive set


1717

Fair Share

Hotels Occupancy Rooms Rooms Sold Fair Share

A 80% 200 160 40%

B 60% 300 180 60%

Market 68% 500 340

markettheonavailableRooms

HotelaofavailableRoomsShareFair

⋅⋅⋅⋅

⋅⋅⋅⋅=⋅


18

Primary Competitors 2009 Fair Share

Hotels OCC% HARC Rooms sold Fair share

Embassy Suites 78.00% 200 56'940 10.4%

Hilton Inn 72.00% 275 72'270 14.2%

Radisson Hotel 68.00% 250 62'050 13.0%

Holiday Inn 73.00% 175 46'629 9.1%

Courtyard 65.00% 62 14'710 3.2%

Ramada Inn 66.00% 150 36'135 7.8%

Island Inn 62.00% 135 30'551 7.0%

Quality Inn 78.00% 175 49'823 9.1%

Days Hotel 74.00% 120 32'412 6.2%

71.3% 1542 401'518 79.9%


19

Secondary Competitors 2009 Fair Share

Hotels OCC% Eff HARC Rooms sold Fair share

Red Roof Inn 82.00% 55 16'462 2.8%

Super 8 78.00% 63 17'794 3.2%

Microtel 90.00% 25 8'213 1.3%

Residence Inn 77.00% 25 6'956 1.3%

Delta Inn 63.00% 33 7'634 1.7%

Four Seasons 72.00% 188 49'275 9.7%

75.1% 388 106'333 20.1%


20

Market Competitors 2009 Fair Share

OCC% HARC Rooms sold Fair share

Primary 71.3% 1'542 401'518 79.90%

Seconday 75.1% 388 106'333 20.10%

Total Market 72.1% 1'930 507'851 100.00%


2121

Market Penetration

The market penetration is used to assess

the relative competitiveness of each hotel,

as a whole and within each market segment.

OccupancyMarket

OccupancyHotelfactornPenetratioOverall

⋅

⋅=⋅⋅


2222

Overall Market Penetration FactorExample

Hotels OCC Rooms Fair Share

Rooms

Sold Market Segment % Market Segment Rooms Sold

Comm Meet Leis Comm Meetg Leisure

A 80% 200 40 % 160 60% 10% 30% 35040 5840 17520

B 60% 300 60 % 180 50% 30% 20% 32850 19710 13140

Market 68% 500 340 67890 25550 30660


2323

Overall Market Penetration Factor

Market Segment PEN factors

Hotels Overall PEN Commercial Meeting Leisure

A 118% 129% 57% 143%

B 88% 81% 129% 71%

%118%68

%80)( ==AOMPF


2424

The market segment penetration factor (MSPF)

The market segment penetration factor

(MSPF) results from calculating the within

segment actual rooms sold as a percent of

the within segment fair share

• Example :

soldRoomsCommercialTotalShareFair

soldRoomsCommercialMSPFCommercial

⋅⋅⋅×⋅

⋅⋅=⋅


2525

The market segment penetration

factor (MSPF)

Market Segment PEN factors

Hotels Overall PEN Commercial Meeting Leisure

A 118% 129% 57% 143%

B 88% 81% 129% 71%

%129156'27

040'35

890'67%40

040'35)( ==

×

=AMSPF


26

Overall Market Penetration

Primary : OCC OMP

Embassy Suites 78.0% 108.2%

Hilton Inn 72.0% 99.9%

Radisson Hotel 68.0% 94.3%

Holiday Inn 73.0% 101.3%

Courtyard 65.0% 90.2%

Ramada Inn 66.0% 91.5%

Island Inn 62.0% 86.0%

Quality Inn 78.0% 108.2%

Days Hotel 74.0% 102.6%

Total Primary 71.3% 99.0%


27

Overall Market Penetration

Secondary OCC OMP

Red Roof Inn 82% 113.7%

Super 8 78% 108.2%

Microtel 90% 124.8%

Residence Inn 77% 106.8%

Delta Inn 63% 87.4%

Four Seasons 72% 99.9%

Total Secondary 75.1% 104.2%

Market 72.1% 100.0%

%7.113%1.72

%82Re)(Re ==

⋅

⋅⋅=⋅

OccupancyMarket

OccupancyRoofdRoofdOMPF


28


factor

PrimaryFair

Share Comm Convention Leisure Totaux

Embassy Suites 10.4% 45'552 2'847 8'541 56'940

Hilton Inn 14.2% 28'908 36'135 7'227 72'270

Radisson Hotel 13.0% 27'923 24'820 9'308 62'050

Holiday Inn 9.1% 25'646 11'657 9'326 46'629

Courtyard 3.2% 11'032 735 2'942 14'710

Ramada Inn 7.8% 23'488 7'227 5'420 36'135

Island Inn 7.0% 18'330 9'165 3'055 30'551

Quality Inn 9.1% 24'911 4'982 19'929 49'823

Days Hotel 6.2% 22'688 1'621 8'103 32'412

Total 79.9% 228'478 99'190 73'850 401'518


29


factorSecondary Fair Share Comm Convention Leisure Totaux

Red Roof Inn 2.8% 9'877 823 5'762 16'462

Super 8 3.2% 10'676 890 6'228 17'794

Microtel 1.3% 6'159 - 2'053 8'213

Residence Inn 1.3% 3'826 696 2'435 6'956

Delta Inn 1.7% 4'962 763 1'909 7'634

Four Seasons 9.7% 29'565 14'783 4'928 49'275

Total 20.1% 65'066 17'954 23'313 106'333

Total market 100.0% 293'544 117'144 97'164 507'851 Bernard Jaquier - Novembre 2010

30


factorMarket Segment Rooms Sold

Primary OCC Comm Convention Leisure

Embassy Suites 78.0% 150% 23% 85%

Hilton Inn 72.0% 69% 216% 52%

Radisson Hotel 68.0% 73% 164% 74%

Holiday Inn 73.0% 96% 110% 106%

Courtyard 65.0% 117% 20% 94%

Ramada Inn 66.0% 103% 79% 72%

Island Inn 62.0% 89% 112% 45%

Quality Inn 78.0% 94% 47% 226%

Days Hotel 74.0% 124% 22% 134%

Total Primary 71.3% 97.4% 106.0% 95.1%


31

The market segment penetration factor

Market Segment Rooms Sold

Secondary :

OCC Comm Convention Leisure

Red Roof Inn 82% 118% 25% 208%

Super 8 78% 112% 23% 198%

Microtel 90% 162% 0% 163%

Residence Inn 77% 102% 46% 195%

Delta Inn 63% 98% 38% 114%

Four Seasons 72% 104% 130% 52%

Total Secondary 75.1% 110.3% 76.2% 119.4%

All segments 72.1% 100.0% 100.0% 100.0%

%118544'293%8.2

877'9)(Re =

×

=⋅⋅ RoofdMSPFCommercial


32

Following Steps

• Forecast Market Demand

• Forecast Market Supply


33

Forcast Market DemandGrowth Rates

Commercial Convention Leisure

2010 5.00% 2.00% 1.50%

2011 4.00% 2.50% 1.50%

2012 3.00% 2.75% 1.50%

2013 3.00% 2.75% 1.50%

2014 3.00% 2.75% 1.50%

2015 3.00% 2.75% 1.50%

2016 3.00% 2.75% 1.50%

2017 3.00% 2.75% 1.50%

2018 3.00% 2.75% 1.50%

2019 3.00% 2.75% 1.50%


34

Forcast Market Demand

Commercial Convention Leisure Total

2009 293'544 117'144 97'164 507'851

2010 308'221 119'487 98'621 526'329

2011 320'550 122'474 100'100 543'124

2012 330'166 125'842 101'602 557'610

2013 340'071 129'303 103'126 572'500

2014 350'273 132'859 104'673 587'805

2015 360'782 136'512 106'243 603'537

2016 371'605 140'266 107'837 619'708

2017 382'753 144'124 109'454 636'331

2018 394'236 148'087 111'096 653'419

2019 406'063 152'159 112'762 670'985


35

Forecast Market Supply2009 2010 2011 2012 2013

Existing rooms Primary 1'542 1'542 1'542 1'542 1'542

Existing rooms Secondary 388 388 388 388 388

Change in HARC (Courtyard) 62 62 62 62

Sheraton project (new hotel) 250 250

Marriott (new hotel) 200 200 200

Best Western (new hotel) 35 140 140 140

Total new rooms - 97 305 250 -

Total Rooms 1'930 2'027 2'332 2'582 2'582

LT Supply Growth 2,93%/year 76

Total Supply 1'930 2'027 2'332 2'582 2'658

Total Rooms Nights available (Supply) 704'450 739'855 851'180 942'430 970'043

Total demand 507'851 526'329 543'124 557'610 572'500

Occupancy 72.09% 71.14% 63.81% 59.17% 59.02%


36

Forecast Market Supply

2014 2015 2016 2017 2018 2019

Existing rooms Primary 1'542 1'542 1'542 1'542 1'542 1'542

Existing rooms Secondary 388 388 388 388 388 388

Change in HARC (Courtyard) 62 62 62 62 62 62

Sheraton project (new hotel) 250 250 250 250 250 250

Marriott (new hotel) 200 200 200 200 200 200

Best Western (new hotel) 140 140 140 140 140 140

Total new rooms - - - - - -

Total Rooms 2'582 2'582 2'582 2'582 2'582 2'582

LT Supply Growth2,93%/year 154 234 316 401 488 577

Total Supply 2'736 2'816 2'898 2'983 3'070 3'159

Total Rooms Nights available

(Supply) 998'465 1'027'697 1'057'761

1'088'681 1'120'483 1'153'190

Total demand 587'805 603'537 619'708 636'331 653'419 670'985

Occupancy 58.87% 58.73% 58.59% 58.45% 58.32% 58.19%Bernard Jaquier - Novembre 2010

37

Long Term Supply Growth Rate

Years Room Night Supply ∆%RNS

2000 990'083

2001 1'018'286 2.85%

2002 1'028'256 0.98%

2003 1'036'876 0.84%

2004 1'058'952 2.13%

2005 1'109'618 4.78%

2006 1'165'655 5.05%

2007 1'205'831 3.45%

2008 1'238'459 2.71%

2009 1'283'078 3.60%

Annual Average Growth Rate 2.93%


38

New Rooms from 2013

Year Rooms Add Rooms Rooms cumul

2012 2'582

2013 2'658 76 76

2014 2'733 78 154

2015 2'811 80 234

2016 2'891 82 316

2017 2'974 85 401

2018 3'058 87 488

2019 3'145 90 577


39

Forecast Market D & S

Year Supply Demand Occupancy

2009 704'450 507'851 72.09%

2010 739'855 526'329 71.14%

2011 851'180 543'124 63.81%

2012 942'430 557'610 59.17%

2013 970'043 572'500 59.02%

2014 998'465 587'805 58.87%

2015 1'027'697 603'537 58.73%

2016 1'057'761 619'708 58.59%

2017 1'088'681 636'331 58.45%

2018 1'120'483 653'419 58.32%

2019 1'153'190 670'985 58.19%


40

Forecast Market D & S

450'000

550'000

650'000

750'000

850'000

950'000

1'050'000

1'150'000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Years

Supply Demand


41

Next Steps

• Forecast Revenues & Costs

• Valuation


Sources

• Source : Hotels & Motels Valuations And

Market Studies, S. Rushmore, Eric Baum,

2001

• Real Estate course, Bernard Jaquier

Bernard Jaquier - Novembre 2010 42

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